The Equity Analyst Team is a student organization within the Johns Hopkins Carey Business School. This exclusive investment management organization is designed to create graduate students that bring both hands-on experience and theoretical knowledge to their future employers. The members are hand-picked, interviewed, and put through a rigorous program.

Thursday, November 17, 2011

SIFIs: Too Big To Fail

November 17, 2011

This
month, the Financial Stability
Board (FSB) released a list of systemically important financial institutions
(SIFIs), and the list includes:

8 U.S. banks:

Bank
of America, Bank of New York Mellon, Citigroup, Goldman Sachs, J.P. Morgan,
Morgan Stanley, State Street, and Wells Fargo.

Those
29 banks will have to raise their
core tier 1 capital ratios above Basel III mandates. The FSB foresees five "buckets", requiring
extra capital of 1%, 1.5%, 2%, 2.5% and 3.5%. The more important the SIFI, the
higher the surcharge it will have to pay. In addition, those
institutions are being strongly encouraged to increase their internal supervisory
measures,
for governments to
safeguard taxpayers’ benefitsin caseof bailing
out institutions deemed too big to fail. Obviously, those requirements would be a big challenge for most of those 29 banks, as surcharges and strict regulation may restrict their ability to lend to the economy, as
well as influence competition with their rivals.

Subscribe To

Facebook Badge

Search This Blog

Total Pageviews

Disclaimer

The opinions expressed here are solely that of the author. This is not intended to be relied up as a forecast, research advice, recommendation, or solicitation to buy or sell any securities. The opinions expressed are as of the date above and are subject to change. The information is derived from sources deemed to be reliable, and are not guaranteed as to accuracy. The information contained in this paper is based upon or derived from information generally available to the public from sources believed to be reliable. Past performance is no guarantee of future results. Reliance upon information in this material is at the sole discretion of the reader.